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A Guide to Opening a Demat Account in a Minor’s Name

In our previous discussions, we emphasized the significance of holding a Demat account for share ownership. Now, let’s explore the process of opening a Demat account in the name of a minor. This account, managed by a natural or court-appointed guardian, allows seamless and paperless management of shares.

Guardian’s Role:

Only natural guardians (parents) or court-appointed guardians are eligible to open Demat accounts for minor children.
Standard Demat account opening forms must be completed. Additionally, both the guardian and the minor need to fill and sign KYC forms.

Required Documents:

The guardian must provide necessary documentation and fulfill KYC requirements.
Proof of the minor’s date of birth is mandatory.
PAN details of both the guardian and the minor are essential.

Reason for Opening Account:

Clearly state the reason for opening the Demat account in the minor’s name in writing.
Institutions often accept an email from the guardian as valid written evidence.

Account Management:

The guardian exclusively manages the Demat account until the minor reaches adulthood.
No trading account can be linked to the minor’s Demat account during this period.

Transition to Adulthood:

Upon turning 18, the Demat account becomes inactive.
To continue trading, a new Demat account must be opened. Holdings can be transferred to the new account.
The minor can choose to maintain the same account by signing a new agreement with the depository participant.